The distribution chain can be viewed as that part of the supply chain from a manufacturer (producer) through its customers (e.g. wholesalers, retailers) to an end consumer. It involves the various business processes a manufacturer must undertake to get a product (goods or services) to the end consumer. In this sense, it is concerned primarily with those parts of the supply chain that are downstream from the manufacturer.
The distribution chain suffers a number of inefficiencies—particularly in relation to the distribution of physical goods. This includes the need to get defect-free products quickly and reliably to the consumer. Traditionally this has involved distributing product through distribution channels (e.g. retailers) so that consumers can purchase and collect (or have delivered) product from a conveniently located distribution channel. This model has shifted with the emergence of online (e.g. internet, mobile telephony) distribution but physical retail represents a significant (and still the dominant) form of distribution to end consumers.
The timely and reliable delivery of product to end consumers remains a challenge. Further, a significant inefficiency of the distribution chain is the holding of items in inventory. The risk of lost sales due to lack of inventory needs to be balanced against the significant costs and risks of holding excess inventory in a warehouse or on a store shelf. Managing these risks requires close co-ordination of a manufacturer with its chosen distribution channels.
One of the complicating factors in managing these risks is the emergence of omni-channel distribution. Put another way, the “breadth” of the distribution chain poses challenges because most manufacturers today need to distribute through a range of distribution channels (e.g. stores, web, mobile) and must carefully co-ordinate business processes to ensure seamless and efficient supply across all distribution channels.
Yet another complication is the increased globalization of product markets. The “depth” of the distribution chain has also increased, with international demand for products posing different challenges to manufacturers in terms of timely and cost-efficient delivery of inventory.
It is a challenge for manufacturers, particularly small manufacturers with limited resources to develop custom-built solutions or to manage in-house all the transactions across this expanded breadth and depth of the distribution chain. Different types of distribution channel (e.g. wholesale, retail) may pose different challenges along the distribution chain. However, a manufacturer must be able to manage these challenges and optimize its business processes to deliver product efficiently to consumers. With the level of competition in the marketplace, it is also critically important for manufacturers to handle these processes efficiently as part of building and maintaining value in their brand(s).
Inventory management systems such as the one disclosed in U.S. Pat. No. 6,601,764 allow the tracking of inventory (time on shelf and item location information) but do not assist manufacturers to manage other transactions in the distribution chain. The inability to manage the entire distribution chain represents a potential loss or leakage of profit through, for example:                a. failure to adequately forecast production to minimise disruption in supply where demand is high or excess inventory where demand is low; or        b. failure to properly record or track returns or warranty repairs from each distribution channel.        
U.S. Pat. No. 8,001,017 discloses an internet-based supply-chain management system that manages a number of transactions across the supply chain. U.S. Pat. No. 8,001,017 claims to reduce transportation costs, predict future consumption, facilitate promotion and advertising, reduce overall supply-chain costs, and save consumers time and money. However, key features of U.S. Pat. No. 8,001,017 include an aggregation of purchases by consumers and of inventory by merchants, both of which can disadvantage manufacturers.
This is because the system of U.S. Pat. No. 8,001,017 includes an order aggregation facility that involves physically aggregating a consumer's orders from a number of merchants and shipping those orders together. This delivery model is subject to the delays of the slowest merchant, and thus may adversely impact the reputation of a brand owner (whether manufacturer or merchant) through no fault of the brand owner. Further, the efficient delivery to an end consumer minimizes the benefit to an individual brand owner because of the aggregated nature of the delivery—indeed, success may be viewed as being the result of an efficient carrier or transport company, or of the operator of the order aggregation facility. As such it benefits inefficient manufacturers and disadvantages efficient ones.
Another disadvantage of U.S. Pat. No. 8,001,017 is the aggregation of inventory by merchants (through the creation of a virtual inventory pool shared by merchants), which reduces the amount of inventory held across the distribution chain to essentially the amount of inventory in transport.
While reducing the amount of inventory may translate to cost savings by consumers, this approach relies heavily on accurate forecasting and the careful co-ordination of transportation. The risk is that unless transportation processes are tightly controlled by manufacturers (and most small manufacturers will not be in a position to do so), availability across the distribution chain can be severely and adversely impacted by sudden, dramatic changes in demand or disruptions in transportation. Further, there is a risk of a lack of supply across a manufacturer's entire distribution chain in the event that either forecasting or transportation is unreliable. This poses particular difficulty for goods with significant manufacturing lead times (e.g. goods that need to be shipped internationally).
Therefore, a disadvantage of the system of U.S. Pat. No. 8,001,017 is that it claims to deliver benefit to end consumers but does so at potential risk to manufacturers and without assisting manufacturers to manage transactions in the distribution chain in the context of omni-channel distribution.
Neither U.S. Pat. No. 6,601,764 nor U.S. Pat. No. 8,001,017 provides a system that allows a manufacturer to manage transactions throughout the distribution chain right through until after any liability to a customer ceases (e.g. liability from defective goods, refunds or warranty repairs) in the context of omni-channel distribution. Current supply chain or distribution management systems ignore the tail end of the distribution chain, after sale to an end consumer. However, failing to record, report, forecast and account liabilities for returns, refunds and warranty repairs can result in a significant leakage of profits for any manufacturer.
An important challenge of the distribution chain faced by manufacturers today is the need to manage consumer demand and expectations in relation to returns or refunds (returned merchandise authorizations or RMAs). In the end, manufacturers only benefit through the delivery of non-defective product to the market and by having efficient systems in place to manage RMAs (including returns for repair or refund, and warranty repairs). This is an important part of brand protection. For a manufacturer, the opportunity to make profit in relation to a single item lasts up to the point of purchase. However, a liability for RMAs exists well into the product lifecycle—for a significant period of time after purchase.
This is particularly the case, with the rising popularity of “extended” warranties. Even without an extended warranty, consumer protection laws in many parts of the world oblige manufacturers to repair or refund goods for a period after purchase.
Having a distribution chain management tool that would allow centralized management (e.g. recording and tracking RMAs and details of RMAs) of RMAs for omni-channel distribution, as well as transactions throughout the distribution chain beyond the point of sale to an end consumer, would allow manufacturers to maximize profit by more effectively managing loss or leakage of profits.
There is a need for a multi-channel distribution management tool, method and system that facilitates the multi-channel distribution of product by a manufacturer, including managing RMAs and other transactions with the market.
It is an object of the present invention to provide a multichannel distribution management tool that facilitates the multi-channel distribution of product to the market throughout the distribution chain for the life of product liability to an end consumer.